Indonesia’s Ministry of Forestry is continuing to undermine the country’s ambitious forest protection program in favor of industrial forestry interests, reports Reuters.

David Fogarty of Reuters investigated the the Rimba Raya REDD project, which aims to conserve 90,000 hectares of peat forest in Central Kalimantan in Indonesian Borneo. Despite winning initial approval from official in Jakarta, the project was last year halved by the Ministry of Forestry, undercutting its viability. Instead, the Ministry of Forestry granted thousands of hectares of deep peat to PT Best, an oil palm company. The concession not only breaks Indonesian law — which prohibits conversion of peatlands deeper than 3 meters — but sends a dangerous signal to other backers of some 40 REDD projects across Indonesia and raises questions of governance. The Ministry of Forestry’s action also puts it at odds with President Susilo Bambang Yudhoyono, who has publicly backed Indonesia’s REDD program.

“Internal forestry ministry documents that Reuters obtained show how the ministry reversed its support for the project after a new minister came in, and a large chunk of the project’s land was turned over to a palm oil firm,” wrote Fogarty. “The case illustrates how growing demand for land, bureaucratic hurdles and powerful vested interests are major obstacles to conservation projects in Indonesia and elsewhere in the developing world.”

The Ministry of Forestry and interests in the palm oil, logging, and pulp and paper fought successfully during the first half of 2011 to greatly limit the area of land included in the moratorium. Civil society groups had called for inclusion of all forests under the moratorium, but the final presidential instruction that defines the moratorium includes only primary forests and peatlands. The moratorium contains large loopholes for energy development and mining.